Insurance is a form of a contract or policy in which an individual or corporate entity exchanges payments for financial protection or reimbursement against losses from the insurer.
Insurance policies are a hedge against financial losses associated with damage to insured properties or liabilities that result from damage or injuries to holder of an insurance policy or a third party associated with the holder of the insurance. The most common types of personal insurance are auto, health, homeowners and life. In the United States, many types of insurance are required by law.
Businesses require specific types of insurance policies that protect against risks specific to that firm’s individual risks. For example, a restaurant is required to purchase a policy that protects it against damage or injury that results from errors resulting from cooking, while an auto dealer may need to protect itself against risks that result from potential buyers test driving vehicles.
